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Trading Chaos: Maximize Profits with Proven Technical Techniques Hardcover – February 27, 2004
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From the Inside Flap
Published in 1995, the bestselling first edition of Trading Chaos provided readers with the most practical and comprehensive guide for applying chaos theory to the real world of trading and investing. But today, the markets are different than they were even a few years ago. So with fresh research in hand, coauthors Bill Williams and Justine Gregory-Williams have updated their profitable methods and provide new techniques to help you take profits from the markets.
Trading Chaos, Second Edition will not only show you how to anticipate, recognize, and react to impending bull and bear market conditions, it will also introduce you to the latest findings in physics and psychology as applied to various marketsstock, bond, futures, indexes, and many others.
The first portion of this book is devoted to understanding how the rewards youll acquire in trading and investing are determined by what is happening inside of you. By digging through some very interesting and deep psychological principles, you can become a profitable "trade/vestor"using technical techniques for good short-term entries and exits, but also holding on to long-term investments when the opportunity presents itself. Trading Chaos, Second Edition will help you build a solid psychological foundation before you enter the markets.
After youve learned how to gain an inner analytic edge, the authors will show you how the application of self-knowledge will improve your bottom line. Through numerous charts, checklists, and examples, youll be introduced to proven techniques that can make the unpredictable understandable and make your journey into the markets more profitable. Youll learn how to:
- Sharpen entries and exits, and reduce whiplashes with the powerful "Alligator" indicator
- Get into a new trend very early with proper use of the "First Wise Man"
- Add on aggressively after your first entry using the "Second Wise Man" with the help of the Awesome Oscillator (AO)
- Make fractal breakout trades with the "Third Wise Man"these almost guarantee profitable follow-through on a trade
In this early part of the twenty-first century, you have a choice to either be a part of the last generation of traders and investors using linear (ineffective) techniques or the first generation using effective nonlinear (chaotic) techniques. By reading the Second Edition of Trading Chaos, youll learn how you can take your trading skills to the next level and make steady profits in any market.
From the Back Cover
"As a trader and an author for over fourteen years in stocks, futures, and options, it still amazes me when I read a book that teaches me new approaches to the market. This book is one of these amazing books that can teach the novice or the professional something important to take them to the next level of their trading. It is a must read for everyone interested in looking at the markets in a new way."
George Fontanills, President Emeritus, Optionetics
"Bill and Justine Williams, two of the truly great teachers of market action, have written an outstanding book. It not only covers the psychology of personal trading but provides one with a well defined, coherent trading plan. This book is must reading for any serious trader, whether a beginner or experienced veteran."
John R. Hill, President, Futures Truth Company
"What Bill Williams does best is raise questions and doubts in the minds of his readers. But, even better, he then provides wonderful new choices for thinking and acting. He has a deft lightness in his writing and a seriousness of purpose that drew me in like a magnet."
Rodney Napier, PhD, head of The Napier Group
coauthor, The Courage to Act and Groups: Theory & Experience (now in its seventh edition)
Top customer reviews
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If a person really wants to have a method to trade it is worth ready many times.
If you understand these concepts you will be a good or great trader.
Also I feel the book incomplete as I see the authors made several references to their earlier books. When I read Chapter 1, I found near end of Section "Understanding, Attitude, Science and Chaos", there is a nasty reference say "To Learn more about the science of chaos and ...... please refer to Chapter 3 ...... previous edition of "Trading Chaos". Funny this book is supposed to replace the book that the authors made reference to. Was it so difficult to include those materials in this book?
This book is not cheap. I suppose this book is self contained, not frequently make reference to earlier book of the author themselves. For this incompleteness, I have to deduct 2 stars in my review.
I suppose for a beginning trader looking for some kind of method to employ it's not a bad one to pursue. Allow me to suggest that the second half of the book should be given perhaps 10% of your consideration while the first half should be given 90%.
The first half of the book is revolutionary, and makes it a classic. It should be removed and marketed separately. In fact, I like your chances of success better if you only read the first half and then develop your own trading method based on what you notice happening in the market. Concentrate on developing a winning mindset and getting in tune with the market you trade. The first half of this book should be kept and reread regularly.
The approach in this book, OTOH, has consistently lost me money. The key problem is the reverse pyramiding; I invariably get creamed within a bar or two of sizing up. This just happened to me today for the last time; this review is my parting shot on what's been a frustrating toolset for me.
The divergent bar is an interesting signal, although the author (Bill's daughter) never really adequately defines the "angulation" that is essential for the signal to work consistently. My rule on "angulation", as with any pattern, is that if it isn't obvious and screaming at you, it isn't valid. Anyway, I'll continue to use this "first wise man" for entries, within certain constraints I won't detail here. But sizing up 5x on wiseman nos #2 and #3, forget it.
Just my experience, yours may differ.
I have personally met with Bill, taken his home study course and even attended a private tutorial. Bill is the real deal. He is a *highly* profitable trader and Bill trades EXACTLY like he describes in his books (simplified over time, so Trading Chaos, 2nd Ed. is the LATEST and most refined method).
If you just want to trade with no other background information, Buy Trading Chaos, 2nd Edition (not this book) and start with chapter seven. When you get to the end of the book, you'll say, "That's it?!?! Than can't be it!" That's what I said. I then went on to take his home study course (13 weeks) and then went to a private tutorial. 95% of the methodology is IN THE BOOK! The more advanced stuff is for those who are scaling into positions and want more aggressive money management techniques.
Who am I to say this works? I started trading Bill's techniques from scratch. In LESS than 6 months I was up 95% in a medium sized account. I found some like-minded investors and we started our own Hedge Fund (more specifically, a commodity pool). I called Bill personally and he spoke with me at length about how I should flow into and out of my positions, etc. He went far above and beyond the call of duty. I cannot speak to how well my Pool is doing (not legal to disclose - considered solicitation of investors), so I cannot give figures of returns for the Pool.
Buy Trading Chaos 2nd Edition and then buy "New Trading Dim mentions" (his second book) and read chapters 9 - 11. Those chapters will give you more ideas of the SCOPE of just what is possible when you simplify your trading and align it with natural market tendencies (chaos principles).
Good luck and Good Trading!